From the NYTimes:
Hoping to save money, Arista Networks, a start-up based in Menlo Park, Calif., has much of its internal technology processes online, or “in the cloud.” Instead of buying its own hardware and software systems from the likes of Microsoft and Oracle, it opted for e-mail and online document services from Google and online sales and manufacturing software from Netsuite, based in San Mateo, Calif.
It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive. She smells a trend.
“I think 80 percent of the new high-tech and small to mid-size companies are doing what we’re doing,” she said.
A spate of start-ups have seized on cloud computing. Companies like Intacct offer online accounting software as an inexpensive alternative to Microsoft’s products, and giants like Amazon.com sell access to data centers for business operations. Amazon has outpaced the traditional hardware makers with such services.
The number of virtualized new servers has doubled over the last three years, which has driven the revenue of VMware, one of the leaders in this cost-saving technology, to an estimated $1.88 billion last year from $387 million in 2005.